A supply manager for an electronics firm has been asked to source packaging for the...

To determine cost-effectiveness, calculate the total cost considering breakage:

0.50 mm packaging: Cost per unit = $1.00 Breakage ratio = 0.50% Breakage cost = $50 * 0.50% = $0.25 Total cost per unit = $1.00 + $0.25 = $1.25

0.60 mm packaging: Cost per unit = $0.80 Breakage ratio = 0.75% Breakage cost = $50 * 0.75% = $0.375 Total cost per unit = $0.80 + $0.375 = $1.175

Although the 0.60 mm packaging seems cheaper in unit cost, it results in higher total costs due to increased breakage. Therefore, the 0.50 mm packaging is more cost-effective. References: Cost analysis in supply chain management, procurement decision-making based on total cost of ownership.